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EXHIBIT 10.1
SHARE TRANSFER AGREEMENT
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By and Among
Nissan Motor Co., Ltd.
and
Structural Dynamics Research Corporation
and
Mechanical Dynamics, Inc.
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SHARE TRANSFER AGREEMENT
This SHARE TRANSFER AGREEMENT, dated as of November 17, 2000, is entered into by
and between Nissan Motor Co., Ltd., a corporation organized and existing under
the laws of Japan and having its principal place of business at 00-0, Xxxxx
0-xxxxx, Xxxx-xx, Xxxxx, Xxxxx and its registered address at Xx. 0, Xxxxxx-xxx,
Xxxxxxxx-xx, Xxxxxxxx-xxx, Xxxxxxxx-xxx, Xxxxx ("Nissan"), Structural Dynamics
Research Corporation, a corporation organized and existing under the laws of the
State of Ohio, U.S.A. and having its principal place of business at 0000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxx 00000, X.X.X. ("SDRC") (Nissan and SDRC together being
called the "Seller") and Mechanical Dynamics, Inc., a corporation organized and
existing under the laws of the State of Michigan, U.S.A. and having its
principal place of business at 0000 Xxxxxxxxxxxx Xxxxxxxxx, Xxx Xxxxx, Xxxxxxxx
00000, X.X.X. (the "Buyer").
WITNESSETH
WHEREAS, Estech Corporation, a corporation organized and existing under the laws
of Japan and having its principal place of business at 00-0, Xxxxxxxxx-xxx,
Xxxx-xx, Xxxxxxxx-xxx, Xxxxxxxx-xxx, Xxxxx (the "Company"), is engaged in
mechanical engineering consulting services through analysis, computer simulation
and testing to be provided to the several industries, including, but not limited
to, the automobile industries;
WHEREAS, the Buyer is willing to acquire the ownership of the Company;
WHEREAS, the Seller is willing to transfer to the Buyer their combined 100%
ownership of the Company by selling the entire issued share capital of the
Company owned by the Seller;
WHEREAS, the parties hereto, upon execution of the Confidentiality Agreement
dated October 28, 1999 (the "Confidential Agreement"), have engaged in a series
of discussions and negotiations concerning the transfer of the shares in the
Company from the Seller to the Buyer;
WHEREAS, the Buyer has conducted certain due diligence investigations concerning
the Company, its assets and the Business, including, without limitation, the
Company's financial, accounting, legal, regulatory and environmental matters;
and
WHEREAS, the Buyer desires to purchase from the Seller, and the Seller desires
to sell to the Buyer, all of the Shares in exchange for the Purchase Price upon
the terms and subject to the conditions of this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual covenants,
agreements, representations and warranties herein contained, the parties hereto
agree as follows:
ARTICLE 1. DEFINITIONS.
For convenience and brevity, certain terms used in this Agreement are defined or
referred to below (such terms to be equally applicable to both singular and
plural forms of the terms defined). "Acquisition" means the transactions
contemplated in this Agreement.
"Adjustment Amount" is defined in Section 2.2.
"Adjusted Purchase Price" is defined in Section 2.2.
"Agreement" means this Share Transfer Agreement.
"Business" means the existing business, operations, facilities and other
Assets, financial condition, results of operations, finances,
markets, products, competitive position, raw materials and other
supplies, customers and customer relations and personnel of the
Company.
"Business Day" means any calendar day which is not a Saturday, Sunday or public
holiday in the place concerned.
"Claim Notice" is defined in Section 10.2(a).
"Closing" and "Closing Date" are defined in Section 3.1.
"Closing Balance Sheet" is defined in Section 2.2.
"Confidential Agreement" is defined in the preamble hereof.
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"Contract" means any written or oral contract, agreement, lease, plan,
instrument or other document, commitment, arrangement, undertaking or
authorization that is or may be binding on any person or its property
under applicable law.
"Court Order" means any judgment, decree, injunction, order or ruling of any
court or governmental or regulatory body or authority that is binding
on any person or its property under applicable law.
"Default" means (i) a breach of or default under any Contract, (ii) the
occurrence of an event that with the passage of time or the giving of
notice or both would constitute a breach of or default under any
Contract or (iii) the occurrence of an event that with or without the
passage of time or the giving of notice or both would give rise to a
right of termination, renegotiation or acceleration under any
Contract.
"Employees" is defined in Section 5.13.
"Employee Adjustment Amount" is defined in Section 4.1(b).
"Guaranty Period" is defined in Section 4.1(b).
"Initial Balance Sheet" is defined in Section 2.2.
"Intellectual Property" is defined in Section 5.11.
"Leases" is defined in Section 5.10.
"Liability" means any liability, indebtedness, obligation, claim, deficiency,
guaranty or undertaking of or by any person (other than endorsements
of notes, bills and checks presented to banks for collection or
deposit in the ordinary course of business) of any type, whether
accrued, absolute, contingent, matured, unmatured or other.
"License" means licenses, franchises, permits and other similar authorizations.
"Lien" means any mortgage, lien, security interest, pledge, restriction on
transferability, defect of title, charge or claim of any nature
whatsoever on any property or property interest.
"Litigation" means any lawsuit, action, arbitration, administrative or other
proceeding, criminal prosecution or governmental investigation or
inquiry, other than the investigations or inquiries which are
conducted by governmental bodies on a regular basis, involving or
affecting the Company, the Business or any Contracts to which the
Company is a party or by which it or the Business may be bound or
affected.
"Material Contracts" is defined in Section 5.12.
"Notice Period" is defined in Section 10.2(a).
"Policies" is defined in Section 5.14.
"Purchase Price" means the aggregate amount of seven hundred eighty-three
million Yen (Yen 783,000,000), subject to adjustment as provided in
Section 2.2.
"Regulation" means any statute, law, ordinance, regulation, order or rule of any
governmental or regulatory body, including, without limitation, those
covering environmental, energy, safety, health, transportation,
bribery, record keeping, zoning, antidiscrimination, antitrust, wage
and hour, and price and wage control matters.
"Seconded Employees" is defined in Section 4.1.
"Seconded Employee Subsidy" is defined in Section 4.1.
"Shares" means five thousand (5,000) ordinary shares of Yen 50,000 each of the
Company which together represents the entire issued share capital of
the Company and all of which are fully paid.
"Subsidy Period" is defined in Section 4.1(c).
ARTICLE 2. SALE AND PURCHASE OF THE SHARES.
2.1. Sale and Purchase of the Shares. Subject to the terms and conditions
hereinafter set forth and on the basis of and in reliance upon the
representations, warranties, covenants and agreements set forth
herein, at the Closing Nissan and SDRC shall each sell to the Buyer
and the Buyer shall purchase from Nissan and SDRC all of the shares
in the Company owned by them in exchange for the payment to Nissan
and SDRC of an amount equal to the Purchase Price, as adjusted
pursuant to Section 2.2.
2.2. Adjustment to Purchase Price. The Purchase Price of Yen 783,000,000
shall be subject to adjustment (the "Adjustment Amount") by an amount
equal to the difference between shareholder equity as shown on the
Company's balance sheet as of March 31, 2000 (the "Initial Balance
Sheet"), and shareholder equity as shown on the Company's balance
sheet as of November 30, 2000 (the "Closing Balance Sheet"). The
Closing Balance Sheet shall be prepared in accordance with generally
accepted Japanese accounting principals consistently applied.
Nissan, in conjunction with SDRC, shall use its best efforts to
cause the Company to prepare and deliver to Nissan, SDRC and Buyer
the Closing Balance Sheet at the earliest
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possible date subsequent to November 30, 2000, but in no event later
than December 15, 2000. The Adjustment Amount shall be added to or
subtracted from the Purchase Price of Yen 783,000,000 as the case may
be (the "Adjusted Purchase Price"). A true and correct copy of the
Initial Balance Sheet is attached hereto as Exhibit A.
ARTICLE 3. CLOSING.
3.1. Closing Date. The closing of the sale and purchase of the Shares (the
"Closing") shall take place at the principal office of Nissan, in
Tokyo, Japan, on Monday, December 18, 2000, or at such other place or
on such other date as the Seller and the Buyer may agree to in
writing. The date of the Closing is hereinafter sometimes referred to
as the "Closing Date".
3.2. Closing.
(a) At the Closing, subject to the provisions of this Agreement,
Nissan and SDRC shall deliver to the Buyer, free and clear of
all Liens, the certificates representing their respective
shares with the Company's endorsement for confirmation of the
transfer of the Shares, in exchange for the full payment by the
Buyer to the Seller of the Adjusted Purchase Price which shall
be paid to the respective bank accounts designated by Nissan
and SDRC in the proportions of seventy percent (70%) to Nissan
and thirty percent (30%) to SDRC. Among the Adjusted Purchase
Price, 70% proportion thereof payable to Nissan shall be in
Japanese Yen, and 30% proportion thereof payable to SDRC shall
be in U.S. dollars based on the conversion rate printed in the
Wall Street Journal the day the Share Transfer Agreement is
executed.
(b) At the Closing, the Seller shall make available to the Buyer
the written resignations of the directors and statutory
auditors of the Company, as separately agreed in writing
between Seller and Buyer, effective as of the Closing Date.
(c) At the Closing, Nissan and SDRC, as the case may be, shall also
deliver to the Buyer, and the Buyer shall deliver to the
Seller, the certificates and other instruments and documents
referred to in Articles 7, 8, 11 and 12 hereof.
3.3. Termination. In the event that the Closing shall not have taken
place on or before December 29, 2000, all of the rights and
obligations of the parties under this Agreement shall terminate
without liability unless otherwise agreed to in writing between the
Seller and the Buyer; provided, however, that if the failure to meet
the Closing is caused by reason of a default or breach by any party
hereto, such party shall be liable for any damages arising out of the
termination of this Agreement. A default or breach by SDRC shall not
be deemed a default or breach by Nissan nor shall a default or breach
by Nissan be deemed a breach or default by SDRC, even if the
obligation breached is that of Seller.
ARTICLE 4. POST-CLOSING OBLIGATION OF NISSAN.
4.1. Seconded Employees. Seller and Buyer acknowledge that certain
employees currently working for the Company are Nissan employees
seconded to the Company ("Seconded Employees"). Seller and Buyer
further acknowledge that Nissan currently is responsible for and pays
i) in case for those who is in the managerial position, an amount
equal to twenty percent (20%) of, and ii) in case for those who is in
the non-managerial position with fifty (50) years of age or older, an
amount equal to ten percent (10%) of, the salary, bonus, cost of
social insurance and retirement allowance for each of the subject
Seconded Employee, together with the board subsidies, (a "Seconded
Employee Subsidy"). To further induce Buyer to purchase the Shares
hereunder, Nissan, but not SDRC, agrees with Buyer as follows:
(a) Nissan will use its best efforts to encourage Seconded
Employees, to the extent permissible under the applicable law,
to remain as employees of the Company; and
(b) For each Seconded Employee who terminates his or her employment
with the Company and returns to Nissan during the ninety (90)
day period commencing the Closing Date (the "Guaranty Period"),
Nissan will pay to Buyer an additional sum of Yen 10,000,000
per such Employee (the "Employee Adjustment Amount"). Buyer
will promptly notify Nissan in writing of the termination date
of each Seconded Employee who leaves the employ of the Company
during the Guaranty Period. The aggregate Employee Adjustment
Amount due from Nissan to Buyer hereunder shall be paid by
Nissan to Buyer within fifteen (15) days from the end of the
Guaranty Period; and
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(c) For the period commencing the Closing Date and ending March 31,
2001 (the "Subsidy Period"), Nissan will pay to the Company at
such intervals as employees of the Company are paid, an amount
equal to the Seconded Employee Subsidy for each Seconded
Employee who remains as the Seconded Employee during any
portion of the Subsidy Period. Subject to the consents of each
employees concerned and labor union to which they belong, the
Seconded Employee are assumed to be remained at the Company
with the current status as the Seconded Employee by March 31,
2001.
ARTICLE 5. REPRESENTATIONS AND WARRANTIES OF NISSAN AND SDRC.
Each of the Seller hereby represents and warrants to the Buyer as specifically
set forth in this Article 5. Each such representation and warranty is true as of
the date of this Agreement, and shall be true in all material respects as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of the Closing Date (except that representations and
warranties that are made as of specific date need to be true only as of such
date).
5.1. Seller's Organization and Standing. Nissan represents and warrants
that it is a corporation duly organized and validly existing under
the laws of Japan. SDRC represents and warrants that it is a
corporation duly organized and validly existing under the laws of the
State of Ohio, U.S.A.
5.2. Authority and Binding Effect. Nissan and SDRC represent and warrant,
but only with respect to themselves and not the other Seller, that
(i) it has full corporate power and authority to execute, deliver and
perform this Agreement and has taken all actions necessary to secure
all approvals required in connection therewith, (ii) the execution,
delivery and performance of this Agreement by it has been duly
authorized by all necessary corporation action, (iii) each person
signing this Agreement on behalf of it has been duly authorized to do
so by all necessary corporate action and has the power and authority
to execute this Agreement on behalf of it, and (iv) this Agreement
constitutes the legal, valid and binding obligation of it,
enforceable against it in accordance with its terms, except that the
enforcement thereof may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of
creditors' rights generally.
5.3. Validity of Contemplated Transactions. Neither the execution and
delivery of this Agreement by the Seller nor the consummation of the
transactions contemplated hereby will contravene or violate any
Regulation or Court Order which is applicable to the Seller, the
Company, or the articles of incorporation or by-laws or their
equivalents of the Seller or the Company, or will result in a Default
under, or require the consent or approval of any party to, any
Contract relating to the Business or to or by which the Seller or the
Company is a party or otherwise bound or affected, or require the
Seller or the Company to notify or obtain any License from any court
or governmental or regulatory body, except that for violations or
conflicts which give no material influence or cannot give any
material influence or violations or conflicts which do not
substantially deprive the Seller of its ability to perform its
obligation hereunder.
5.4. Capital Structure and Share Ownership of the Company.
(a) The Company's authorized share capital consists of twenty
thousand (20,000) ordinary shares, of which total five thousand
(5,000) Shares of fifty thousand Yen (Yen 50,000) each have
been validly issued are fully paid and nonassessable. Three
thousand five hundred (3,500) Shares are registered in the name
of Nissan and one thousand five hundred (1,500) Shares are
registered in the name of SDRC. All of such shares are
beneficially owned by the Seller, free and clear of any Liens.
(b) There are and have been (i) no other class or series of any
capital shares or other securities of the Company, whether or
not presently authorized, issued or outstanding, (ii) no
Contracts, subscriptions, options, warrants, calls,
commitments, privileges or rights of any character to purchase
or otherwise acquire any capital shares or other securities of
the Company, whether or not presently authorized, issued or
outstanding, from the Seller or the Company, at any time, or
upon the happening of any stated event, (iii) no outstanding
securities of the Seller or the Company that are convertible
into or exchangeable for capital shares or other securities of
the Company and (iv) no Contracts, subscriptions, options,
warrants, calls, commitments, privileges or rights to purchase
or otherwise acquire from the Seller or the Company any such
convertible or exchangeable securities.
(c) The Company has no subsidiaries nor any ownership interest in
any other entity.
5.5. Title to Shares. Each of the Seller has the right and ability to sell
and transfer the Shares to the Buyer. The certificates representing
the Shares have been executed by a duly authorized officer of the
Company
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and are in the Seller's possession. The Seller's ownership of the
Shares is registered in the Company's register of shareholders
located at the principal office of the Company. No approvals or other
actions by the Company are necessary for the sale and transfer of the
Shares by the Seller to the Buyer, except for the approval of the
Company's board of directors, the registration of such transfer in
the Company's register of shareholders and exchange of share
certificates.
5.6. Financial Statements.
(a) The Seller has delivered, or has caused the Company to deliver,
to the Buyer true and complete copies of (i) the Company's
Initial Balance Sheet, (ii) the Company's profit and loss
statement for the fiscal year ended on Xxxxx 00, 0000, (xxx)
the Company's balance sheets dated August 31, 2000, and
September 30, 2000, respectively, (iv) the Company's profit and
loss statements for the five month period ended August 31,
2000, and for the six month period ended September 30, 2000 and
(v) all related notes and schedules.
(b) To the best of the Seller's knowledge, there has been no
material adverse change in the financial conditions of the
Company since March 31, 2000, to the date of this Agreement.
Further, the Initial Balance Sheet and the other financial
statements referred to in (a) above have been, and the Closing
Balance Sheet will be, prepared in accordance with generally
accepted Japanese accounting principles consistently applied.
5.7. Books of Account. The books of account of the Company fairly
reflects, in accordance with generally accepted Japanese accounting
principles consistently applied, (i) all transactions relating to the
Company and (ii) all items of income and expense, assets and
liabilities and accruals relating to the Company.
5.8. Litigation; Claims. Except as disclosed in writing to the Buyer,
there is no Litigation pending or, to the best knowledge of the
Seller, threatened against the Company, its assets or the Business.
No claim has been asserted and no event has occurred that would, in
the Seller's reasonable belief, result in a claim or Litigation
against the Company, its assets or the Business.
5.9. Assets. The Company has, and at the Closing Date, the Company will
have, good and unencumbered and marketable title to all of its
tangible assets as reflected on the Closing Balance Sheet, except for
dispositions made prior to Closing in the ordinary course of
business, free and clear of all security interests, mortgages, liens,
pledges or encumbrances of any kind. Schedule 5.9 to this Agreement
lists all current customers of the Company and all former customers
of the Company with whom the Company has done business during the
past three (3) years.
5.10. Leases. Schedule 5.10 to this Agreement lists all leases for real
estate and personal property to which the Company is a party
("Leases"). The Seller has delivered to the Buyer a true and complete
copy of each Lease. All the Leases are valid and binding obligations
of the parties thereto and no event of default exists under any Lease
nor does any condition exist which after the passage of time or
otherwise would allow any party to any Lease to declare an event of
default thereunder.
5.11. Intellectual Property. Schedule 5.11 to this Agreement lists all of
the Company's intellectual property, software programs, including
without limitation, the software programs known as "Estech Nasdas"
and "Estech Ride", trademarks, service marks, copyrights and patents
("Intellectual Property"). Except as otherwise indicated on said
Schedule 5.11, the Company is the sole and exclusive owner of all
Intellectual Property, including without limitation, all rights to
the source code and the object code of all software listed on said
Schedule. There have been no claims and to the knowledge of Seller,
there is no basis for any claim, challenging the scope, validity,
ownership or enforceability of any of the Intellectual Property. To
the best of the Seller's knowledge, no claim has been made that the
Intellectual Property or any activity of the Company infringes upon
the proprietary rights of any third party or that any activity of any
third party infringes upon the Intellectual Property of the Company.
5.12. Agreements and Contracts. Schedule 5.12 to this Agreement lists all
of the current agreements, contracts, licenses, arrangements,
understandings and commitments, written or otherwise, to which the
Company is a party or as to which the Company has any liabilities or
obligations providing for payments to or liabilities of the Company,
including any agreement(s) between the Company and Nissan and between
the Company and SDRC (collectively, the "Material Contracts"). With
respect to the Material Contracts:
(a) all of the Material Contracts are valid and binding obligations
of the parties thereto in accordance with their respective
terms and there has occurred no event which would constitute a
breach of or default by the Material Company or any other party
under any of such Material Contracts; and
(b) each Material Contract will remain in full force and effect,
without any restriction, limitation, cost, penalty or consent,
notwithstanding the acquisition of the Shares by Buyer
hereunder; and
(c) Seller has heretofore delivered to Buyer true and complete
copies of each written Material Contract.
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5.13. Employees; Employee Benefits. The Seller has delivered, or has caused
the Company to deliver, to the Buyer true and complete list
concerning all of the employees of the Company ("Employees") as of
the date of this Agreement with specific description of all Seconded
Employees. Said list also includes the age, date of hire, position,
total amount of salary and bonus which has been actually paid during
the period from April 2000 through October 2000 of each such
Employee. No Employee of the Company has any employment agreement or
other arrangement with the Company except as disclosed in said list.
All accrued Employee benefits and liabilities are shown on the
Initial Balance Sheet and will be shown on the Closing Balance Sheet
in accordance with generally accepted Japanese accounting principles
consistently applied.
5.14. Insurance. Schedule 5.14 to this Agreement contains a true and
complete list of all insurance policies owned or held by the Company
("Policies") and sets forth the type and extent of coverage for each
such Policy. All Policies are in full force and effect. All premiums
with respect thereto covering all periods up to and including the
Closing Date have been paid and no notice of cancellation or
termination has been received by the Company with respect to any
Policy. Such Policies are sufficient for compliance with all
requirements of law and all agreements to which the Company is a
party, are valid and enforceable and will remain in full force and
effect through the Closing Date without the payment of additional
premiums. No claims under any current or former insurance policy are
currently pending.
5.15. Undisclosed Liabilities. As of the date of the Initial Balance Sheet,
there were, and as of the date of the Closing Balance Sheet, there
will be no liabilities or obligations of the Company of any kind or
nature whatsoever which have not been adequately reflected and/or
disclosed on such Balance Sheets. Since the date of the Closing
Balance Sheet, there will have been no liabilities or obligations
incurred outside of the usual and ordinary course of business of the
Company. The Company has not guaranteed any debt or obligation of any
third party. The Company does not currently engage in "design
activities" and has not in the past engaged in such "design
activities" for Nissan or any other customer which could give rise to
a claim that the Company has partial design responsibility for any
product.
5.16. Taxes. The Company has prepared and timely filed all tax returns and
reports required by law and all taxes shown thereon to be due have
been timely paid in full.
5.17. Accounts Receivable. The amounts shown as accounts receivable on the
Closing Balance Sheet will be accurate in all respects and determined
in accordance with generally accepted Japanese accounting principals
consistently applied. To the best of the Seller's knowledge, all of
such accounts receivable will have arisen in the ordinary course of
the Company's business and are valid and collectible in the ordinary
course and not subject to any counter claims or set offs.
5.18. Compliance With Law. The Company has complied, in all material
respects, with all applicable laws, regulations, orders and other
requirements of governmental authorities and the Company has not
received any notice of violation of any applicable law or regulation
relating to its assets or Business. Further, the Company is currently
in compliance, in all material respects, with all applicable
environmental laws and has never violated any applicable
environmental law and has not received any notice of noncompliance
with any environmental law in connection with the operation of its
Business.
5.19. Bank Accounts. Schedule 5.19 to this Agreement sets forth a full and
complete list of all of the Company's bank accounts and the names of
the persons authorized to draw thereon.
5.20. Absence of Changes or Events. Subsequent to March 31, 2000, and to
the Closing Date:
(a) There have not been any material adverse changes, either
individually or in the business, properties or results of
operations of the Company;
(b) The business affairs of the Company have been conducted in the
same manner as theretofore conducted and in the usual and
ordinary course;
(c) No transaction or material contract has been entered into by
the Company, other than in the usual and ordinary course of
business;
(d) There has been no casualty affecting the Company or loss,
damage or destruction to any of its properties, whether or not
covered by or compensated under any insurance policy of the
Company;
(e) The Company has not declared or paid any dividend or other
distribution in respect to the capital stock of the Company;
(f) The Company has not created, incurred or assumed, or committed
to create, incur or assume, any indebtedness or other
liability, except for accounts payable or other current
liabilities which (i) are not for borrowed money, (ii) were
incurred in the usual and ordinary course of business, and
(iii) have not been and will not be adverse to the business,
properties or results of operations of the Company;
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(g) The Company has not mortgaged, pledged or otherwise encumbered
any of its assets;
(h) The Company has not varied insurance coverage;
(i) The Company has not altered or amended its Articles of
Incorporation or Bylaws; and
(j) No changes have been made to the accounting practices used by
the Company, except for changes required under the generally
accepted Japanese accounting principles.
ARTICLE 6. REPRESENTATIONS AND WARRANTIES OF THE BUYER.
The Buyer hereby represents and warrants to each of the Seller as set forth in
this Article 6. Each such representation and warranty is true as of the date of
this Agreement, and shall be true in all material respects as of the Closing
Date with the same effect as though such representations and warranties had been
made on and as of the Closing Date (except that representations and warranties
that are made as of specific date need to be true only as of such date).
6.1. Buyer's Organization and Standing. The Buyer is a corporation duly
organized and validly existing under the laws of the State of
Michigan, U.S.A.
6.2. Authority and Binding Effect. The Buyer has full corporate power and
authority to execute, deliver and perform this Agreement and has
taken all actions necessary to secure all approvals required in
connection therewith. The execution, delivery and performance of this
Agreement by the Buyer has been duly authorized by all necessary
corporation action. Each person signing this Agreement on behalf of
the Buyer has been duly authorized to do so by all necessary
corporate action and has the power and authority to execute this
Agreement on behalf of the Buyer. This Agreement constitutes the
legal, valid and binding obligation of the Buyer, enforceable against
it in accordance with its terms, except that the enforcement thereof
may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights
generally.
6.3. Validity of Contemplated Transactions. Neither the execution and
delivery of this Agreement by the Buyer nor the consummation of the
transactions contemplated hereby by the Buyer will contravene or
violate any Regulation or Court Order which is applicable to the
Buyer, or the articles of incorporation or by-laws of the Buyer, or
will result in a Default under, or require the consent or approval of
any party to, any Contract to which the Buyer is a party or by which
it is otherwise bound or affected, or require the Buyer to notify or
obtain a License from any court or governmental or regulatory body
except that for violations or conflicts which give no material
influence or cannot give any material influence or violations or
conflicts which do not substantially deprive the Buyer of its ability
to perform its obligation hereunder.
6.4. Due Diligence Investigation. As of the date of this Agreement, the
Buyer has conducted and completed its due diligence investigation on
the Company and the Business, except that Buyer will conduct
additional interviews with the employees of the Company as it deems
necessary.
6.5. No Knowledge of Default. As of the date of this Agreement, the Buyer
has no knowledge of any default by Seller.
ARTICLE 7. SELLER'S COVENANTS.
7.1. Covenants. From the date hereof until the Closing Date, except as may
be approved by the Buyer or as otherwise expressly provided
in this Agreement, the Seller shall cause the Company to:
(a) operate the Business only in the ordinary course and in
substantially the same manner as it has been operated in the
past and not sell any of its material assets except for sales
from inventory in the ordinary course of business;
(b) not issue, repurchase or redeem or commit to issue, repurchase
or redeem, any shares of its capital stock, any options or
other rights to acquire such stock or any securities
convertible into or exchangeable for such stock;
(c) not declare or pay any dividend on, or make any other
distribution with respect to, the Shares; and
(d) not (i) incur any amount of long or short-term debt for money
borrowed, (ii) guarantee or agree to guarantee the obligations
of others, (iii) indemnify or agree to indemnify others or (iv)
incur any other Liabilities other than those incurred in the
ordinary course of business consistent with past practice.
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7.2. Other Agreements. At or prior to the Closing, Nissan and SDRC agree
to terminate the Joint Venture Agreement dated March 18, 1994,
between them and to certify such termination to Buyer at Closing.
ARTICLE 8. BUYER'S COVENANTS.
8.1. Covenants. The Buyer covenants with and undertakes to the Seller as
follows:
(a) The Buyer shall, within one (1) month from the date of its
receipt of all the resignation documents as referred to in
Section 3.2(b) above, elect new directors and statutory
auditors of the Company, with whom such personnel to be
resigned as referred to in Section 3.2(b) shall be replaced,
and register thereof with the local Legal Affairs Bureau;
(b) Provided that the full liability for such payments (except for
the meritorious service reward) is reflected on the Closing
Balance Sheet, the Buyer shall cause the Company to pay to the
directors and statutory auditors of the Company to be resigned
as referred to in Section 3.2(b) above, upon his or her
resignation from the Company, one hundred percent (100%) of the
applicable retirement allowance under the rules of the Company
as of the date of this Agreement; and
(c) The Buyer shall not hire or otherwise solicit any of the
Company's former employees who quit or resigned the Company
within six (6) months prior to the Closing Date.
ARTICLE 9. SURVIVAL OF REPRESENTATION AND WARRANTIES.
All of the representations, warranties, covenants and agreements made by each
party under this Agreement or in any attachment, certificate, document or list
delivered by any such party pursuant hereto or in connection with the
Acquisition shall survive one (1) year from the Closing Date and each party
hereto shall be entitled to rely upon the representations and warranties of the
other party set forth in this Agreement.
ARTICLE 10. INDEMNIFICATION.
10.1. Indemnification Obligations. SDRC and/or Nissan (i) proportionally
in 30% (for SDRC): 70% (for Nissan) basis, not jointly and severally
to the extent they each are responsible, and (ii) SDRC or Nissan to
the extent only one shall have committed an indemnifiable event set
forth in (i) - (iii) below (one or two "indemnifying party") shall
indemnify and hold harmless the Buyer, and the Buyer (another
"indemnifying party") shall indemnify and hold harmless the Seller,
from, against and in respect of any and all material damages, losses,
deficiencies, liabilities, costs and expenses resulting from,
relating to or arising out of any (i) material misrepresentation,
(ii) material breach of warranty, or (iii) non-fulfillment of any
material agreement or covenant on the part of such indemnifying party
or parties hereunder. For purposes of this Section 10.1, the term
"material" shall mean any matter subject to this Article 10 involving
Yen 2,700,000 or more.
10.2. Method of Asserting Claims. All claims for indemnification under
this Article 10 shall be asserted and resolved as follows:
(a) In the event that any claim or demand for which an indemnifying
party would be liable to the indemnified party under Section
10.1 above is asserted against or sought to be collected by a
third party, the indemnified party shall promptly provide the
indemnifying party with notice of such claim or demand (the
"Claim Notice"), specifying the nature of such claim or demand
and the amount or the estimated amount thereof to the extent
then feasible (which estimate shall not be conclusive of the
final amount of such claim or demand). The indemnifying party
shall have one (1) month from its receipt of the Claim Notice
(the "Notice Period") to notify the indemnified party (i)
whether or not the indemnifying party disputes all or part of
its liability to the indemnified party hereunder with respect
to such claim or demand and (ii) whether or not it desires, at
its sole cost and expense, to defend the indemnified party
against such claim or demand; provided, however, that the
indemnified party is hereby authorized prior to and during the
Notice Period to file any motion, answer or other pleading
necessary or appropriate to protect its interests. If and to
the extent that the indemnifying party notifies the indemnified
party within the Notice Period that it does not dispute such
indemnification liability, all or such part of the
indemnification liability shall
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be conclusively deemed to be a liability of the indemnifying
party hereunder. If the indemnifying party notifies the
indemnified party within the Notice Period that it desires to
defend the indemnified party against such claim or demand, it
may participate in the defense thereof, at its sole cost and
expense. If the indemnifying party participates in the defense
of any such claim or demand, the indemnified party shall
cooperate in the defense. Irrespective of whether the
indemnifying party has participated in the defense or
settlement of any such claim or demand as to which it has
disputed such indemnification liability, any amount which must
be paid as a result of such claim or demand shall, subject to a
determination that the disputed liability is covered by these
indemnification provisions, be a liability of the indemnifying
party hereunder. Neither party shall settle, compromise or
discharge any third party claim or demand for which indemnity
is required hereunder without the consent of the other such
party, which consent shall not be unreasonably withheld.
(b) In the event that the indemnified party should have a claim
against the indemnifying party hereunder which does not involve
a claim or demand being asserted against or sought to be
collected from it by a third party, the indemnified party shall
promptly send a Claim Notice with respect to such claim to the
indemnifying party. If the indemnifying party does not notify
the indemnified party within the Notice Period that it disputes
such claim, the amount of such claim shall be conclusively
deemed a liability of the indemnifying party hereunder.
(c) Nothing herein shall be deemed to prevent any indemnified party
from making a claim hereunder for potential or contingent
claims or demands provided the Claim Notice sets forth the
specific basis for any such potential or contingent claim or
demand and the estimated amount thereof to the extent then
feasible and the indemnified party has reasonable grounds to
believe that such a claim or demand will be made.
10.3. Payment.
(a) In the event that any party is required to make any payment
under this Article 10, such party shall promptly pay the
indemnified party the amount so required. If there should be a
dispute as to the amount or manner of determination of any
indemnity obligation owed under this Article 10, the party from
which indemnification is due shall nevertheless pay when due
such portion, if any, of the obligation as shall not be subject
to dispute. The difference, if any, between the amount of the
obligation ultimately determined as properly payable under this
Article 10 and the portion, if any, theretofore paid shall bear
interest as provided in Section 10.3(c) below. Upon the payment
in full of any claim, either by setoff or otherwise, the party
making payment shall be subrogated to the rights of the
indemnified party against any person, firm, corporation or
other entity with respect to the subject matter of such claim.
(b) Each indemnifying party shall make full and immediate payment
to the indemnified party of any items as to which the
indemnified party is entitled to payment under this Article 10.
(c) If all or part of any indemnification obligation under this
Agreement is not paid when due, then the indemnifying party
shall pay the indemnified party or parties interest on the
unpaid amount of the obligation for each day from the date the
amount became due until payment in full at the fluctuating rate
per annum which at all times shall be the rate of interest with
respect to Yen generally charged from time to time by a leading
Japanese bank and publicly announced by such bank as its
so-called "prime rate."
10.4. Limitation. The aggregate maximum amount of indemnification by the
Seller to the Buyer under this Article 10 and any other
responsibilities under this Agreement shall be the amount equivalent
to thirty percent (30%) of the Purchase Price. Seller shall have no
indemnification obligation except and only to the extent the
aggregate indemnity obligation under this Article 10 and any other
responsibilities under this Agreement exceeds Yen 2,700,000.
ARTICLE 11. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE BUYER.
The obligations of the Buyer under this Agreement to be performed by it in
connection with the Closing are subject to the fulfillment prior to or at the
Closing of each of the following conditions:
11.1. Nissan's and SDRC's Representations True at Closing. The
representations and warranties of Nissan and SDRC contained in this
Agreement and otherwise made by Nissan and SDRC pursuant to this
Agreement shall be true and correct as of the Closing Date with the
same effect as though made as of such time.
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11.2. Performance by the Seller. The Seller shall have performed and
satisfied all agreements, covenants and conditions which it is
required by this Agreement to perform or satisfy prior to or on the
Closing Date.
11.3. Litigation Affecting Closing. No Court Order shall have been issued
or entered which would be violated by the completion of the
Acquisition. No person who or which is not a party to this Agreement
shall have commenced or threatened to commence any Litigation seeking
to restrain or prohibit, or to obtain substantial damages in
connection with, this Agreement or the transactions contemplated by
this Agreement and no Litigation shall be pending or threatened
against the Company.
11.4. Material Adverse Changes. From the date hereof to the Closing Date,
neither the Company not the Business shall have been materially
adversely affected in any way. There shall be no conditions existing
or threatened with respect to the Company or the Business that might
be expected to have a material adverse effect on any of them. The
Closing Balance Sheet shall confirm the foregoing.
11.5. Officer's Certificate. The Buyer shall have received a certificate
from an appropriate officer of the Seller dated the Closing Date
certifying in such detail as the Buyer may request that each of the
conditions described in Sections 11.1 through 11.4 has been
fulfilled.
11.6. Certified Corporate Documents. The Buyer shall have received copies
of (a) the Articles of Incorporation and Bylaws of the Company, and
(b) minutes of a meeting of the Board of Directors of the Company in
which a resolution is adopted by the Board approving the transfer of
the Shares from Seller to Buyer in accordance with this Agreement,
all of which documents shall be certified to be true, accurate and
complete by the Company as of the Closing Date.
11.7. Incumbency Certificate. The Buyer shall have received a certificate
from an appropriate officer of the Seller dated the Closing Date
certifying to the incumbency of the officers of the Seller signing
for this Agreement and as to the authenticity of their signatures.
11.8. Noncompetition Agreement. The Buyer shall have received a
noncompetition agreement executed by the appropriate officers of both
Nissan and SDRC, confirming Seller's agreement not to compete with
Estech, in the form attached hereto as Exhibit B.
11.9. Other Agreements. Buyer shall have received written confirmation from
SDRC, signed by an appropriate officer, confirming that the Master
Software License and Service Agreement dated in 1989 between the
Company and SDRC remains in full force and effect at the Closing
Date.
11.10. Form and Content of Documents. The form and content of all documents,
certificates and other instruments to be delivered by the Seller
shall be satisfactory to the Buyer.
11.11. Completion of Due Diligence. The Buyer shall have been completed and
to be satisfied with its due diligence prior to the Closing Date.
11.12. Consents. The Seller or the Company shall have delivered to the Buyer
all consents required to be obtained in connection with the
Acquisition in order to avoid a Default under any Contract to or by
which the Company is a party or may be bound. Each of the foregoing
must be free from burdensome restrictions and conditions not
applicable to the Company prior to the date of this Agreement.
ARTICLE 12. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLER.
The obligations of the Seller under this Agreement to be performed by it in
connection with the Closing are subject to the fulfillment prior to or at the
Closing of each of the following conditions:
12.1. Buyer Representations True at Closing. The representations and
warranties of the Buyer contained in this Agreement and otherwise
made by the Buyer pursuant to this Agreement shall be true and
correct as of the Closing Date with the same effect as though made as
of such time.
12.2. Performance by the Buyer. The Buyer shall have performed and
satisfied all agreements, covenants and conditions which it is
required by this Agreement to perform or satisfy prior to or on the
Closing Date.
12.3. Continued Employment. The Buyer shall have offered on the continued
employment contract between the Company and its current Employees
with the terms and conditions of at least as favorable to such
Employees as the terms and conditions they presently enjoy.
12.4. Litigation Affecting Closing. No Court Order shall have been issued
or entered which would be violated by the completion of the
Acquisition. No person who or which is not a party to this Agreement
shall have commenced or threatened to commence any Litigation seeking
to restrain or prohibit, or to obtain substantial damages in
connection with, this Agreement or the transactions contemplated by
this Agreement.
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12.5. Officer's Certificate. The Seller shall have received a certificate
from an appropriate officer of the Buyer dated the Closing Date
certifying in such detail as the Seller may request that each of the
conditions described in Sections 12.1 through 12.3 has been
fulfilled.
12.6. Incumbency Certificate. The Seller shall have received a certificate
from an appropriate officer of the Buyer dated the Closing Date
certifying to the incumbency of the officers of the Buyer signing for
this Agreement and as to the authenticity of their signatures.
12.7. Form and Content of Documents. The form and content of all documents,
certificates and other instruments to be delivered by the Buyer shall
be satisfactory to the Seller.
12.8. Regulatory Compliance and Approval. The Seller shall be satisfied
that all approvals required under any Regulations to carry out the
Acquisition shall have been obtained and that the parties have
complied with all Regulations applicable to the Acquisition.
ARTICLE 13. TERMINATION.
13.1. Termination by Mutual Consent. This Agreement may be terminated at
any time prior to the Closing by mutual consent of the Seller and the
Buyer.
13.2. Termination for Breach. Each party may terminate its obligations
under this Agreement at any time prior to the Closing if the other
party shall have breached any of their representations, warranties or
other obligations under this Agreement in any material respect. Such
termination may be effected by written notice from either the Seller
or the Buyer, as appropriate, citing the reasons for termination, and
shall not subject the terminating party to any liability for any
valid termination.
ARTICLE 14. CONFIDENTIALITY.
14.1. Confidentiality. The parties hereto acknowledge the confidential
nature of the existence and contents of this Agreement and the
information supplied in entering into this Agreement, including those
supplied during the negotiations for the execution of this Agreement,
(hereinafter collectively referred to as "Confidential Information")
and shall not without the prior written consent of the other party to
communicate or otherwise disclose any part of such Confidential
Information to any person except:
(a) where such Confidential Information becomes public without the
failure of the disclosing party;
(b) where such disclosure is required by law, regulations or where
such disclosure is required by related authorities; or
(c) where such disclosure is made to employees or agents of such
party to the extent necessary for such employees or agents to
perform the duties assigned to them by such party pursuant to
this Agreement, provided that such employee or agent shall have
agreed to keep such Confidential Information secret and such
party shall take such other precautions as may be necessary or
appropriate to preserve the confidential or secret nature of
such Confidential Information.
14.2. Notwithstanding the provision as stated in Section 15.4 hereof, the
parties hereto agree and confirm that the Confidential Agreement
shall remain in full force and effect.
ARTICLE 15. MISCELLANEOUS.
15.1. Contents of Agreement. This Agreement may not be amended except by an
instrument in writing signed by all the parties hereto, and no
claimed amendment, modification, termination or waiver shall be
binding unless in writing and signed by the party against whom or
which such claimed amendment, modification, termination or waiver is
sought to be enforced.
15.2. Waiver. Any term or provision of this Agreement may be waived at any
time by the party entitled to the benefit thereof by a written
instrument executed by such party.
15.3. Remedies Not Exclusive. Nothing in this Agreement shall be deemed to
limit or restrict in any manner other rights or remedies that any
party may have against any other party under applicable law.
15.4. Entire Agreement. This Agreement constitutes the entire agreement and
supersedes all prior agreements and understanding, both written and
oral, between the parties hereto with respect to the subject matter
hereof.
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15.5. Severability. Any provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall be ineffective to the extent
of such invalidity or unenforceability without invalidating or
rendering unenforceable the remaining provisions hereof, and any such
invalidity or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other
jurisdiction.
15.6. No Benefit to Others. Except as specifically contemplated by this
Agreement, the representations, warranties, covenants and agreements
contained in this Agreement are for the sole benefit of the parties
hereto, the Company and its successors and assigns, and they shall
not be construed as conferring and are not intended to confer any
rights on any other persons.
15.7. Further Assurances. Subject to the provisions hereof, the parties
hereto shall use their best efforts to take, or cause to be taken,
such action, to execute and deliver, or cause to be executed and
delivered, such additional documents and instruments and to do, or
cause to be done, all things necessary, proper or advisable under the
provisions of this Agreement and under applicable Regulation to
consummate and make effective the transactions contemplated by this
Agreement. In addition, the Buyer shall make the records of the
Company available to Seller in the event that Seller has a reasonable
need for such access.
15.8. Assignment and Binding Effect. This Agreement may not be assigned
prior to the Closing by any party hereto without the prior written
consent of the other party. Subject to the foregoing, all of the
terms and provisions of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the successors and
assigns of the Seller and by the successors and assigns of the Buyer.
15.9. Cost. Each of the Seller and the Buyer shall pay all legal,
accounting and other fees and expenses which such party incurs in
connection with this Agreement and the transactions contemplated
hereby, and none of the expenses of the Seller shall be paid by the
Company. However, if this Agreement is terminated pursuant to Section
13.2 or if the failure to satisfy a condition of Closing arises out
of the breach of any representation, warranty or other obligation
contained in, pursuant to or under this Agreement, the party
terminating this Agreement shall be entitled to receive from the
breaching party the expenses of the terminating party incurred
between the date of this Agreement and the date of termination.
15.10. Notices. Any notice, request, demand, waiver, consent, approval or
other communication which is required or permitted hereunder shall be
in writing and shall be deemed given only if delivered personally to
the address set forth below (to the attention of the person
identified below) or sent by telegram, facsimile or by registered or
certified mail, postage prepaid, as follows:
If to Nissan to:
Nissan Motor Co., Ltd.
00-0, Xxxxx 0-xxxxx
Xxxx-xx, Xxxxx 000-0000, Xxxxx
Tel: (00) 0000-0000
Fax: (00) 0000-0000
Attn.: Koji Honda
General Manager, Administration
Department for Affiliated Companies
If to SDRC to:
Structural Dynamics Research Corporation
0000 Xxxxxxx Xxxxx
Xxxxxxx, Xxxx 00000, XXX
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxx X. Xxxxxxxxxxx
Vice President, Secretary and
General Counsel
If to the Buyer to:
Mechanical Dynamics, Inc.
0000 Xxxxxxxxxxxx Xxxx.
Xxx Xxxxx, Xxxxxxxx 00000, XXX
Tel: (000) 000-0000
Fax: (000) 000-0000
Attn.: Xxxxxxx X. Xxxxxxxxxx
Chairman and CEO
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or to such other address as the addressee may have specified in a
notice duly given to the sender and to counsel as provided herein.
such notice, request, demand, waiver, consent, approval or other
communication shall be deemed to have given as of the date so
delivered or received by telegram or facsimile or, if mailed, five
Business Days have elapsed in the place of the address after the date
so mailed.
15.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of Japan.
15.12. Arbitration. All disputes, controversies or differences which
may arise between the parties hereto, out of or in relation to or in
connection with this Agreement shall be finally settled by
arbitration in Tokyo, Japan by three (3) arbitrators in accordance
with the Commercial Arbitration Rules of The Japan Commercial
Arbitration Association. The award rendered by the arbitrators shall
be final and binding upon the parties hereto.
15.13. Headings. All headings are for convenience only and shall in no way
modify or restrict any of the terms or provisions hereof. Any
reference in this Agreement to a Section shall be deemed to be a
reference to a Section of this Agreement unless the context otherwise
expressly requires.
15.14. Schedules and Exhibits. All attachments, Exhibits and the Schedules
referred to herein are intended to be and hereby are specifically
made a part of this Agreement.
15.15. Counterparts. This Agreement may be executed in three (3) or more
counterparts, each of which is an original and all of which together
shall be deemed to be one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first written above.
NISSAN MOTOR CO., LTD.
By: /S/
-----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Senior Vice President
STRUCTURAL DYNAMICS RESEARCH CORPORATION
By: /S/
-----------------------------------
Name: Xxxx X. Xxxxxxxxxxx
Title: Vice President, Secretary and General Counsel
MECHANICAL DYNAMICS, INC.
By: /S/
-----------------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Chairman and CEO
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EXHIBIT A
TO
SHARE TRANSFER AGREEMENT
INITIAL BALANCE SHEET
(SECTION 2.2)
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ESTECH CORPORATION
BALANCE SHEET
(THOUSANDS OF YEN)
--------------------------
March 31, 2000
--------------------------
Current Assets
Cash yen 71,485
Accounts receivable-trade 156,872
Work in process 25,869
Supplies 872
Loans receivable 300,000
Accounts receivable-other 4,407
Deferred tax assets 23,096
Allowance for doubtful accounts (1,842)
--------------------------
Total current assets 580,759
Intangibles 655
Investment and Other:
Long-term prepaid expense 10,605
Deferred tax assets 16,946
Other 59,395
--------------------------
86,946
--------------------------
yen 668,360
==========================
Current liabilities
Accrued income tax yen 22,942
Consumption tax payable 3,483
Accrued expense 83,162
Other current liabilities 1,447
--------------------------
111,034
Retirement benefits 32,467
Shareholders' equity
Common stock 250,000
Retained earnings 274,859
--------------------------
524,859
--------------------------
yen 668,360
==========================
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EXHIBIT B
TO
SHARE TRANSFER AGREEMENT
NONCOMPETITION AGREEMENT
(SECTION 11.8)
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NONCOMPETITION AGREEMENT
I hereby confirm that NISSAN (SDRC) agrees not to establish in Japan, as its
subsidiary company, any legal entities which will have same or similar, in all
material respects, business purpose with the Company as such purpose as of this
date, during the period of three (3) years after the Closing Date.
Date:
---------------------
---------------------
Name:
Title:
Nissan Motor Co., Ltd.
(Structural Dynamics Research Corporation)
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